I have long been a supporter of using rewards credit cards as a way to earn points and cash back on our purchases. Every year my wife and I accumulate enough points to redeem a few hundred dollars back that we put towards holiday gift purchases. In the past, there really wasn’t much concern on our part by using credit cards to make all of our purchases so we could earn this extra money. However, this all changed a few weeks ago when I read one of our monthly statements from our Discover Open Roads credit card.
The Discover Open Roads card earns you 5% cash back on up to $100 in gas and car maintenance purchases every month. That translates into $60 of extra income each year, just by purchasing gas! My family uses this card strictly for our gas purchases as well as any extra incentives offered by Discover to earn points.
Several weeks ago I was reviewing our monthly statement and noticed an extra $1.09 line item charge for what Discover calls – Payment Protection. I then decided to go back and double check my previous months statements to see if this charge showed up and sure enough it did! I found it on the previous three months statements ranging from $.86 to $2.72. I immediately called a representative to discuss the matter.
Turns out these extra charges were a “protection plan” offered by the card in case I lost my job and couldn’t make my payments. Discover would wave any interest on the card in the event I could no longer make my payments for up to 24 months (or something like that). How nice of Discover to offer to not charge me any interest if I couldn’t pay my bill by actually charging me a monthly fee!
After arguing with the customer service representative for several minutes about “how” and “why” I automatically got signed up for this service – they waived the charges going forward and gave me a refund for the prior months charges. Apparently, I was sent a notification that I needed to opt out of the program by a certain date or I would automatically be signed up for this program. I am not saying that I never received the notification, but I know I never read anything like that.
The point of this story is that banks, credit card providers, and several other companies are starting to add these extra charges and hidden fees to their customers. This is certainly a way to recoup the money they have lost during the credit crunch and recession. While an extra $1 per month fee on our Discover card is not going to make us go broke, it reduces the 5% we would have been getting back on the card to under 4%! If I new that before opening up an account with the company – I probably would have decided against it.
Where to Look for Hidden Fees and Extra Charges
As mentioned earlier, I found this extra fee that started showing up on our Discover credit card recently that I did not know I was being charged for. While credit card companies are known for this type of behavior, there are several other providers and companies that have a tendency to add on these extra charges to the consumer.
Here is a list of providers and companies that may try and charge you extra money on your bill -
- Credit Cards
- Banks
- Hotels
- Airlines
- Cable TV providers
- Cell Phone providers
- Home Phone Providers
Final Thoughts
While the credit card companies and banks are up to some unethical tactics, I believe it is the consumer who needs take responsibility for what they are charged. Ultimately you have the final say in opening up a new credit card or taking out a questionable loan from a lender. While these extra charges or fees may be hidden, they can normally be found in the fine print. You should also pay attention to the details of your monthly statements on credit cards and other utility bills that are not a fixed payment every month. Check up on questionable charges and call your provider to make certain you understand what you are being charged for.
I will leave you with one additional item I found on my Discover card recently. I started reading the important messages that are sent to my online account. The most recent message highlighted changes to my account. In the past I choose not to read these as I pay the bill off every month and didn’t need to worry about different interest rate charges and late fees. However, the most recent message noted that we would be charged an extra 2% fee on all purchases made outside the United States. While I don’t make any of these types of purchases, I was glad I read that message.
What additional fees have you started noticing on your statements in the past several months?
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That’s why I have all my credit card transactions download into MS Money, and I check it a couple of times a week. That way, nothing sneaks by me. It worked out well when I had an unauthorized charge a couple of years ago. It wasn’t a fee from a bank, but it was fairly small (about $7) from some company that had somehow gotten my credit card number. I disputed the charge with the credit card company and received my money back.
Also, it’s good you caught the 2% charge. I, also, don’t read my credit card notices because we pay them off every month. But, when we went to England about 3 years ago, we got caught with some charges like that. I had been fine when I used my card several years before that when I lived in Germany, so I didn’t even think about an international fee. Now I know
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Great article. When you think about how much time you’ve spent to create passive income, you don’t want to waste it on small charges from these companies that you didn’t authorize.
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What a scam! I sure am glad you caught that…I can’t believe you have to “opt-out” of something like that! Opt in, maybe…
That is crazy, thanks for the heads up.
Brandon’s last blog post..My Best Investment – 1st Quarter 2009
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I think it’s funny how one side of the contract gets to change the terms on a whim, while the other is largely powerless to do any such thing. Good thing you caught it fairly quickly.
Blake’s last blog post..No Private Student Loan Goal- an Update.
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This is a great articles . Thanks for sharing.
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